This staff report on Colombia's arrangement under the Flexible Credit Line highlights economic policies and development. Colombia's economic performance in recent years has been very strong, underpinned by a very strong institutional framework and prudent macroeconomic management. Following a sharp slowdown in 2008-2009, output growth rebounded vigorously, and inflation stayed within the official target range. A very strong policy framework-comprising an inflation-targeting regime, a flexible exchange rate, effective financial sector supervisionand regulation, and a medium-term fiscal framework-provided policy space to undertake timely and effective countercyclical measures to mitigate the effects of the global financial crisis, and skillful policy management helped maintain strong growth with low inflation.